Culture, Governance and Accountability

The key to managing regulatory risk?

The UK financial services regulators continue to focus on the role of culture in the firms they regulate as a driver for potential harm. From our advisory and contentious work with clients we see first-hand the extent of regulatory scrutiny on how firms promote a positive healthy culture and how their governance structures and systems and controls support this.

We have unparalleled experience assisting financial services firms with the implementation of the SMCR. Our risk advisory and contentious regulatory specialists can help clients to assess the effectiveness of their governance frameworks and remedy issues identified. With other colleagues and specialist non-legal practitioners, we understand what culture is and why it matters. What’s needed will depend on the size, scale and maturity of the, firm in question. Our work with rapidly growing fintechs and challenger banks, as well as established global institutions allows us to tailor our advice to meet clients’ needs.

Through our work with clients on these issues we have identified seven themes that are central to effective engagement with the regulators for firms of all types. Over the coming weeks we will publish a series of short posts highlighting some of the questions that arise in relation to each of these themes and how these questions crystallise around certain regulatory priorities. Check in here to review the latest updates.

Risk and control

The three lines of defence model has become near universal, expected by regulators for all but the smallest firms. Dynamic risk identification and management in the first line remains a priority for both firms and the regulators but brings with it some practical challenges. How do second and third line functions support a firm’s culture? When and how should you tweak the model and how do you know when it is working well?

Holding people to account

Swift and effective disciplinary processes are vital to promoting a culture of trust, alongside the speak up and listen up campaigns that are now widespread. Do your disciplinary processes promote openness? How do you monitor whether your whistleblowing policy is effective? And that complainants don’t suffer long term career consequences?
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